Reform Burdensome Property Taxes
New Jersey retains the dubious distinction of ranking as the most heavily burdened Property Tax State in the entire nation. So why is this not the top subject of discussion by our State officials. And we see continued State actions which further drive up local property taxes.
First, it is past time that the State must make fundamental changes in how we pay for government and for schools. And it is surely time that a serious public discussion address options to reach this goal. New Jersey’s extraordinary over-reliance on the property tax to fund education and local/county governments does not relate to a person’s ability to pay, thereby placing a tremendous and unfair burden on homeowners. Escalating property taxes drive out of our towns retirees and senior citizens on fixed incomes who can no longer afford to stay in their homes, and make it difficult for young families or anyone to afford to live in New Jersey. Property taxes are a top impediment to businesses. In fact, a recent study found that New Jersey ranks Numero Uno in the country in people moving out of state.
Second, the State should restore to municipalities and local property taxpayers Energy Tax Receipts diverted by the State to pay for state spending. Taxes on gas and electric utilities were originally collected by the host municipalities. When the state made itself the collection agent for these taxes, it promised to return to towns all proceeds for municipal property tax relief.
For many years, however, state officials of both political parties have diverted funding from Energy Taxes to fund state programs. Thus, instead of being spent on local programs and services and used to offset local property taxes, the money has been spent as successive Legislatures and Administrations have seen fit. The cumulative impact of years of underfunding has left many municipalities with serious needs and burdensome property taxes.
Third, the state should stop using Clean Energy Fund and Recycling Tonnage grant monies to support the state budget spending. Over the past three years, more than $800 million and for FY2014, an additional $194 million from the Clean Energy Fund has been used to plug state budget gaps. The administration has scooped up money from environmental funds that provide grants to towns and encourages recycling and another that pays for damages caused by operating or closing landfills. With this year’s budget, more than $1.2 billion will have been diverted from environmental funds since 2010.
Fourth, the state should stop efforts to seize municipal Housing Trust Funds. Whether you concur with the Mt. Laurel decisions or not, we can agree that there is a societal need to address housing affordability in our communities and that regardless of how this is addressed, the burden should not fall on local property taxpayers. The NJ Council on Affordable Housing (COAH) met for the first time in over two years to begin State efforts to seize an estimated $160 million dollars of municipal affordable housing trust funds.
The affordable housing trust funds are collected by municipalities from developer fees to subsidize the provision of affordable housing. They are meant to assist municipalities in meeting their State mandated housing obligations and to provide a revenue source that is not dependent on the property tax. If the State is successful in taking this funding, it does not remove the State imposed obligations to provide affordable housing, but merely pushes that financial obligation onto property taxpayers and places further mandates on local governments.
I have run out of space for fifth, sixth, seventh – but you get the point. While there is lots of talk in Trenton about “no new taxes”, they are certainly not talking about all of the state diversions of local revenue which further drive up local property taxes, or, key, about the need to fundamentally restructure New Jersey’s property tax system.